Ringgit Set for Monthly Loss as Europe Debt Concern Saps Demand

Nov. 30 (Bloomberg) -- Malaysia’s ringgit was headed for
its second biggest monthly loss this year as Europe’s lingering
debt crisis sapped demand for higher-yielding assets.

The MSCI Asia-Pacific Index of stocks fell today, snapping
a two-day rally, on concern Europe’s effort to expand its
bailout fund will fall short of the region’s needs. Euro-area
finance ministers approved enhancements to their bailout fund,
while backing off setting a target for how much firepower they
plan to muster.

“Europe is under pressure to resolve its debt problem and
that is still weighing on sentiment,” said Akira Banno, a
treasury adviser at Bank of Tokyo-Mitsubishi UFJ Bhd. in Kuala
Lumpur. “Without clear direction, the ringgit will likely trade
within the 3.16 to 3.19 range to the dollar this week.”

The ringgit weakened 3.2 percent this month and 0.3 percent
today to 3.1760 per dollar as of 4:29 p.m. in Kuala Lumpur,
according to data compiled by Bloomberg. The currency fell 7
percent in September, the most this year.

Malaysia’s gross domestic product rose 5.8 percent in the
three months through September from a year earlier after
expanding a revised 4.3 percent in the previous quarter, the
central bank said in a statement in Kuala Lumpur on Nov. 18.

Inflation may remain relatively stable for the rest of the
year and moderate in 2012, central bank Governor Zeti Akhtar
Aziz said in Kuala Lumpur on Nov. 18. Bank Negara Malaysia kept
its overnight policy rate unchanged at 3 percent on Nov. 11 even
as Indonesia and Australia lowered interest rates this month.

Five-year Malaysian government bonds rose this month. The
yield on the 4.262 percent notes due September 2016 decreased
five basis points, or 0.05 percentage points, to 3.30 percent,
according to Bursa Malaysia.

To contact the reporter responsible for this story:
Elffie Chew in Kuala Lumpur at
echew16@bloomberg.net.